Grace Ross: To Slot Or Not To Slot

Tuesday, April 30, 2013

Grace Ross, GoLocalWorcester MINDSETTER™

I went to the Worcester City Council Subcommittee hearing this past Wednesday. They were having the potential slot parlor owner come testify and discussing the general question of having a slot parlor in Worcester as per whatever negotiations the City Manager has been engaged in.

Approaching the door I was offered a button to wear and kind of pressured about wearing it. I don’t mind saying what side of this issue I am on, but inevitably it’s complicated and people have strong feelings about it. A button simply cannot convey enough information to be useful. There are real issues here in the lives of real people, and those deserve a thoughtful response.

I saw a lot of friends at the hearing. And I decided, I’d put on the button anyway.

Sure enough, as I was leaving I was followed into the elevator and spoken to very loudly! A friend I hadn’t’ seen in probably a couple of years was very upset. And he assumed my position was not about the economics; not a good assumption knowing me...

The issue of slot machines has been sold as good for economic development and tangled up in very strong feelings that people have about the need for jobs.

There is no question – even while our government is in complete denial – that people are desperate for jobs. There’s some assumption that any job is enough for people to survive on and that’s certainly not true.

What this friend of mine did bring home to me though is that for people who talk about jobs as a theoretical issue they’re doing a huge disservice; I may sound that way sometimes.

Jobs are about survival in a society without a safety net. Emotions run incredibly hot around this understandably especially as most of us continue in the economic depression. (And especially when we have even democratic government leaders cutting income of folks on social security, etc.)

The debate around the slot parlors is real money and real jobs.

One key fact that I have learned needs to inform all of these big outside corporation siting discussions.

If you are an economically struggling community and an outside developer comes in to develop any kind of industry, they’re not here to create money for our community. Like all businesses their goal is to create money for themselves.

So if they say they’re going to invest $214 million you can be absolutely certain that they’re only doing that because they plan to make a lot more than $214 million. The real economic question is not the $214 million investment they make because they’re planning to take that money out of our community in the future, multiplied a few times. The real question is if they put that investment in and they take out a lot more money over the next few years than they put in, where is additional economic growth for the rest of us going to come from? In other words, unless the money they put in is going to create additional income in our community overall, over and beyond what they draw that out of our community, this is not going to be a plus on our balance sheet.

They wouldn’t do the investment if they weren’t sure that they would make money. We need to make sure that if they make the investment we make money. There is no free ride.

And because these are not companies that are indigenous to our community they don’t have other incentives to be here. A business owner who started their business here, grew up here, sent their kids to school here, they have social and personal reasons – in addition to making money – to stay here and to continue to invest. It’s the reason why local businesses tend to give a lot more in contributions outside of their business activities to local civic initiatives. They really care whether the money that they’re making is contributing to a better community because they’re here and they’re kids are here and they’re probably hoping their grandkids will be here.

Take that all off the table. All that matters for a slot parlor investors to come in is if they think they’re gong to be able to take more money out in the long run.

The challenge to us as a community deciding whether this deal makes sense is: are they going to generate enough additional income so that we make out as well?

Then other factors come into play. While they’re making money, is this also creating ongoing really good paying jobs for local folks? Cause those local folks when they get their good money in their pocket are likely to spend most of it locally. It’s going to have a multiplier affect.

If the investor actually produces a product, is it contributing to our community because they’re producing some kind of good that everybody in our local community would like to buy? Say they’re building electric vehicles and that’s going to have a good environmental impact or they’re going to be doing scientific research and bringing in students from the Tech/Voc school to get hands on experience in some new technology, that’s another kind of contribution.

In this case what I found out in the few days leading up to the hearing is: slot parlors tend to provide badly paying jobs unlike the casino industry which is almost all good-paying union jobs; they will essentially airlift the money that they make out of our community as they make it; there are social downsides to slot parlors that are well documented; and the negative economic impact of gambling on local communities has been documented too.

I know I haven’t had my questions answered.

Councilor Russell argued that the only thing that could convince him about a slot parlor would be if there were enough decent paying jobs long term to make it worth the investment for us. That certainly would be one measure. The slot parlor guys claimed that they helped increase local business, studies around any kind of gambling institutions in general seems to show that they in fact harm local businesses. We would certainly want to see – based on this investor’s track record – if there is a multiplier affect because other businesses benefit from it.

Slot parlors, everyone concedes only bring in money from folks pretty near by unlike a casino that might bring people from far away. Slots don’t attract real tourist dollars. If all we are supplying is a means of draining the communities around Worcester so that we make a little bit of profit; that doesn’t help us as part of a regional economy. We don’t live on an island economically; the incomes of people in surrounding communities and those monies kicking around locally matter for Worcester.

I’m all for the huge benefit of good paying, local jobs

So far, nothing in this deal guarantees good paying jobs, spin off local economic development or a net gain financially for Worcester directly from these activities. And we know that we will be paying for the impact of increased gambling addiction.

This Worcesterite wants real proof on our local economic balance sheet – the investor will make sure they get theirs if they come here.

Grace Ross is a former Gubernatorial candidate and author of Main St. Smarts.